Same thing here. I tried compiz, xfce with compositor and xcompmgr, no matter the settings, I can't get rid of this "z" line.

Then I tried Beryl and after some tweaking the videos with xv became flawless (I had to remove the __GL_SYNC_TO_VBLANK in my start file). But I think it is because it doesn't seem to use the indirect rendering by default because I tried Compiz without indirect rendering : same result.

Alas, I can't use beryl or compiz with direct rendering for an everyday use because of a strange bug : when too many windows are opened every new window/menu/fullscreen app is black or blank (the limit is soon reached but the number depends on their complexity, I can open more terminals than firefox windows). I'm using a geforce 6200 turbocache.